Disallowance of proposed dividend

Hi

Proposed Dividend is merely an appropriation of profit ie below the line item.It is not taken into consideration while calculating tax liability.

Thank you Richa.

Then what is the logic behind adding back this for calculation of book profit u/s 115JB?

It is a provision for unascertained liability, hence added back for 115JB. Look proposed dividend may be reduced also by members in AGM.

Proposed dividend is added back for calculation of book profit u/s 115JB only if proposed dividend is debited to P/L and the logic is same it cannot be considered as an expense so it is disallowed.